The big question - renovate or rebuild?

You live in a lovely area with excellent schools and pleasant neighbours, but your family is growing. Maybe you’re expecting a baby, or your once-tiny toddlers are now gangly teenagers, or your mother-in-law is moving in. Whatever the reason, you would very much like more space.

So, do you renovate and expand your existing house, or do you knock it down and build a new one? Weighing up these two options can be complex.

You’re up to your eyeballs in unknown quantities: Does your house have solid foundations? How much stress can the family handle over the build period? How much warmer might a new house be – and what’s that worth?

Is it worth keeping?

Start by asking yourself whether the house is worth saving, advises quantity surveyor James White, director of Kwanto. “A turn-of-the-century villa or bungalow? I’d be loath to bowl that over and lose the ‘story’. [Demolishing] a brick-and-tile might be an easier decision.”

A dated, characterless house is far less appealing – particularly if it’s cold, damp and not energy-efficient. In that case, replacing it with a new build could work well. You won’t be destroying anything of particular value and you’ll create a modern home that is dramatically more liveable. An efficient home-building company may even be able to match the price of renovation.

“If you renovate, part of your home is fresh, modern, dry and healthy, while the original parts could have ‘old bones’,” says Aidan Jury, chief operations officer at Jennian Homes.

“Knocking down and rebuilding could mean that you get exactly the home you want at a similar price to, if not cheaper than, a major renovation.”

Hidden issues

A new build also removes some of the uncertainty inherent in renovations. Altering old homes almost always turns up unexpected and expensive problems, from drainage issues to crooked walls to timber ruined by borer.

New builds are easier to price reliably. If you stick to the original plans, it’s possible to complete the build within budget. It’s making changes once the build has started that tends to cause costs to balloon – as seen on almost every episode of TV programme Grand Designs.

New builds also provide a unified finished product, Jury points out. “Major renovations to existing houses can be expensive, plus adding new to the old doesn’t always work harmoniously. It can be difficult to make the end result meet your needs as well as look like everything works together.”

However, a well-planned renovation may give you more value for your dollar by retaining existing spaces and adding to them.

White has both renovated a villa for the family and built a new beach house. “Having done both myself, I enjoyed the new build more than renovating, because there was less uncertainty. But I had the same budget for both and I got a much smaller new-build property, versus the family home I extended.”

Cut costs by living on-site

If you want to keep costs down during renovation, you can consider living on-site during the building work. Auckland homeowners Kevin and Debra Wells pulled this off with the renovation of their three-bedroom-plus-study Glendowie house.

Before the renovation, the couple were sharing a single toilet and bathroom with their three children (aged 13, 12 and 8). The build project increased the size of the master bedroom and added an en suite, second living area and an internal garage, creating more storage space. “We estimated it was going to cost around $600,000 to replace with a new build. The renovation went over budget, but it still cost under $400,000,” says Kevin Wells.

Staying in the house during the renovation saved an additional $20,000 in rent, although he adds that the stress factor was huge.

“It was supposed to take two or three months, but we’re at the eight-month mark now and we probably have another month to go,” he says.

“A new build is more of a known [quantity]. With a reno, as soon as you cut open a wall, you find an issue.

“I didn’t realise the architect had put the garage at footpath height, so the drainage was more complicated, and the builders spent a lot of time digging a trench in bad weather – that really added to the bill.”

The almost-finished product has the space the family needs at a cost which has been far exceeded by the home’s increased value. The Wellses now plan to stay there until the children have left home.

Talk to the experts

To make the decision about whether to rebuild or renovate, your first step should be to talk to architects and builders about what you have and what you want, says White.

These professionals should have the experience to guide you towards a smart choice, as well as providing general estimates to help you understand the costs.

Whichever path you take, your project will be at least slightly stressful, and definitely expensive. But if you plan well and spend wisely, the outcome should make it all worthwhile.

First published 29 May, 2018

By Amy Hamilton Chadwick

The editorial below reflects the views of the editorial contributor only and content may be out of date. This article is sourced from a previous JUNO issue. JUNO’s content comes from sources that it considers accurate, but we do not guarantee that the content is accurate. Charts are visually indicative only. JUNO does not contain financial advice as defined by the Financial Advisers Act 2008. Consult a suitably qualified financial adviser before making investment decisions.

SUBSCRIBE

Sign up to our newsletter to receive the latest news, updates and event invites from JUNO investing magazine.